European Fiscal Monitor: July 2024
After a prolonged period of stagnation, the EU economy is expected to
rebound in 2024. According to EU projections by national Independent
Fiscal Institutions (IFIs), the EU’s real GDP is set to grow by 1.1 % in
2024 on average, compared with 0.4 % in 2023. Also, annual inflation
across the EU is projected to continue its downward path. Still,
economic risks driven mainly by geopolitical uncertainties surround the
macroeconomic environment. The escalation of tensions in the Middle East
can disrupt supply chains and increase commodity prices. The ensuing
uncertainty has implications for trade and financial markets, and can
weigh on investment and growth prospects.
Furthermore, elections in several Member States this year can give rise to policy uncertainty and affect government spending. Similarly, persistently high interest rates and weak economic activity are likely to bring about challenges for public finances. Public finance projections suggest that in several EU Member States, including France and Belgium, general government deficits will go above the Treaty reference value of 3 % of the GDP. What is more, except in a few countries, gross public debt ratios in most EU countries will not see any major improvement. (...)
Furthermore, elections in several Member States this year can give rise to policy uncertainty and affect government spending. Similarly, persistently high interest rates and weak economic activity are likely to bring about challenges for public finances. Public finance projections suggest that in several EU Member States, including France and Belgium, general government deficits will go above the Treaty reference value of 3 % of the GDP. What is more, except in a few countries, gross public debt ratios in most EU countries will not see any major improvement. (...)
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